Oracle Blog

Core Applications for the Insurance Industry

Thursday Oct 16, 2014

Changes in market conditions are leading carriers to make changes to their product offerings. “A lot of annuity carriers already have MVAs, but those that don’t are busy adding them to their products right now,” says Danny Fisher, president of the Fisher Agency, a Dallas brokerage general agency. The carriers are persisting on securing MVA approvals largely because of concerns about the interest rate environment, Fisher says. Today’s fixed annuities are paying very low interest rates, he explains.

MVA Annuities on the Rise

Let’s take a look at what’s happening in the MVA annuities market. Last year, while MVA annuity sales were up 88 percent over second quarter compared to fixed-rate non-MVA products were up 71 percent, income annuities were up nearly 19 percent, and indexed annuities were up 10 percent, according to Beacon’s third quarter report. Similarly, when compared with third quarter performance of the previous year, MVA annuities in third quarter 2013 were up by staggering 131 percent, while fixed-rate non-MVA gains were less than half, about 61 percent.

$2.5 billion worth MVA sales in third quarter were up from $1.3 billion in second quarter. That growth says a lot about the current direction of the MVA segment: Sales are chasing rates. With this level of growth, carriers will need tools to help them manage this business in an efficient way.

Selecting the Right Core Admin Solution to help with MVA Annuity Management

Generally, MVA annuity is treated as a fund that tracks the prevailing rate. Some products use calculated values stored in fields on the policy in lieu of a fund. A good life insurance policy administration system that maintains MVA annuity products should be:

Configurable to allow each carrier's version of MVA

Calculations should be customizable based on their product's profile

Be able to carry out a series of calculations using the results of each prior calculation, so as to arrive at the finalized; Cash Surrender Value after the MVA factor and then MVA has been calculated per set formulae.

Capable to quickly apply any changes/modifications to the formulae.

With the consistent growth in sales of Market Value Adjusted annuities, inevitable indications with various surveys have lead to suggest that Market Value Adjusted annuity products can boost growth in business for carriers of any size. Oracle Insurance Policy Administration provides a highly configurable and flexible platform that enables the carriers to quickly build and sell various custom products including Market Value Adjusted annuities with record speed-to-market times leveraging the highly customizable calculation capabilities and pre-built templates.

To learn more about Oracle Insurance Policy Administration for Life and Annuity and how Oracle’s solutions can be used to support your business, visit oracle.com/insurance.

Tuesday Aug 12, 2014

To drive competitive advantage, life insurance and annuity carriers must continuously
innovate within their product portfolio to move new products to market rapidly
and efficiently. However, traditional lengthy product lifecycle management
processes are still slowing the time required to launch new products to the
market. Around 70% of small and mid-sized insurance businesses are still using
manual or partially automated methods, taking several months to launch new
products. This drives up development costs, delays ROI and leads to the loss of
potential new business.

What if you
could accelerate development and launch products to market in days rather than

By extending
each predefined product template (also called a chassis), insurers can quickly
define custom products, create user-defined transactions, and add new business
processes and regulatory requirements at the product, product line, and company
levels.

Use of templates
can help reduce time by providing a vision of what is possible within the
policy administration system. Also, it provides a starting point of common best
practices that can be adapted to business - so the carriers do not have to
start from scratch, allowing them to better align business processes to get the
most value out of new IT investments.

Product Templates:

Templates are
documented, predefined set of product definitions built out to demonstrate a
particular way to address policy life-cycle processing. The template
specifications include the definition of the underlying features, transactions,
calculations, tables and business processes. This will help carriers to get a
jump start of the product life cycle for implementation of traditional and
non-traditional life products, increasing the ability to help reduce the time
and cost to launch new products.